LOA is indeed tricky stuff being designed to ensure the average Serviceman is no worse off overseas when living the same lifestyle as the average Serviceman at home (ignoring wives/partners earnings to be sure). Of course nobody is actually average and for each man who complains there is probably another keeping schtum and banking the proceeds or polishing his smart duty free car. There is a massive industry involved in checking the spending patterns of Servicemen in UK and then comparing the costs overseas. It does throw up some anomalies though. In the 90s in a secret Netherlands NATO HQ I was paid almost 3 times as much LOA as my friend at the equally secret German Phantom base a mere 30 minutes drive away - of course I didn't complain but when I enquired how this might have come about I was told it was because we couldn't shop at the NAAFI - we could of course use the USAF BX about 40 minutes in the other direction but that's another story.
Bottom line - its about as fair as you can expect from a system designed to prove that nobody is getting an unfair advantage.